White-collar crime usually refers to any crimes that occur in the workplace, including employee theft and embezzlement (also referred to as occupational fraud) or owner/management fraud, bribery, money laundering, and tax evasion.
You can’t afford not to think about white-collar crime and your business. The numbers are too big to ignore.
The median loss from white-collar crime in companies with fewer than 100 employees in 2014 was $154,000. The longer you ignore problems, the greater the financial loss you’ll experience.
Don’t make assumptions
Honest people typically can’t fathom the devious mind. It’s important for honest owners seeking to prevent and combat white collar crime in their companies to face realities: fraudsters come in all shapes and sizes. The long-time sweet looking bookkeeper can easily be embezzling funds from you. An employee who comes in early and works hard all day may be stealing inventory or may fake or exaggerate an injury in order to scam workers’ compensation. A great salesperson may be padding her expense report.
Adopt sound business practices designed to prevent some types of fraud. Owners should stay on top of the company’s banking activities and question any withdrawal that seems odd (e.g., payable to a vendor that’s unfamiliar). Why? The 2014 Global Fraud Study from the Association of Certified Fraud Examiners (ACFE) found that “check tampering schemes occurred in 22% of small business cases.”
Make it clear to employees that there is a zero tolerance to fraud. If anyone is caught stealing inventory or committing other illegal acts, you will notify the local police and press charges.
There’s a bad connotation associated with whistleblowers who may be viewed as tattlers. In some companies, whistleblowers have been punished for coming forward to report illegal or at least questionable activities. Some have experienced retaliation (e.g., termination, unfavorable reassignment). However, encouraging honest employees to come forward is helpful to your business. Like the Department of Homeland Security, you should encourage employees: “If you see something, say something™.”
Trust your instincts
If you sense that something is wrong, don’t doubt yourself. If you overhear something that doesn’t sound right (e.g., an employee bragging about buying a car that seems to be beyond his means), don’t ignore the information. Investigate further; you may be mistaken about a particular employee, but (unfortunately) you could be right.
You can find fraud protection strategies in AFCE’s Small Business Fraud Prevention Manual. It’s $59 for non-AFCE members. I’ve only read the sample chapter, but it seems to be a good reference guide.